In what way is Amazon's DRM "broken". It works fine on all 3 of my Kindles. Or, do you mean that is is possible to remove the DRM? All DRM is removable, as far as I know, if you know what you are doing.

I suppose by watermark, you mean embedding some text in the book saying who the owner is. Yes, you can do that, but you have to recreate the book every time in order to add the text.

It seems to me that you're likely to protect it so much, no-one will buy it. Adding DRM will only affect your paying customers, not those who rip you off by downloading unauthorised copies.

Watermarking is the only form of DRM I'm happy with on my books, but it's not possible through the Amazon Kindle store, as it would require Amazon to provide it. Indeed, it's only possible at the moment through your own web site.